How far into the red can you go?

[Misterfeep]

First I love this game so a big thanks to the developers!

I am not playing in the beginner's world but I am definitely a beginner as far as the rules!  The question I have is how far into the red can I go?  I am 500k in the red and I don't appear to be being charged interest.  I can keep flying which means paying for fuel, staff and marketing.  At first I assumed I had to take out loans and did and was charged interest.  In later attempts I just let the airline go into the red.  No interest appears to be charged.    How long can this go on before the game forces me into bankruptcy?

Thanks!

[Sigma]

It can go quite a while; many, many real-life days.

Once you go in the red more than a game-week or two you will get a warning that you need to return your airline to profitability within 7 real-life days.  But that's profitability, not necessarily in the black, you just need to start turning a profit.  So get yourself a good week and the clock will reset.

Most of your bills get paid while you're in the Red.  Leases will not renew however and, most importantly, C/D checks won't be completed.  Once you miss a couple C/D checks you're bound to get caught.  When that happens your CI will plummet quickly and pax will start to run away in droves.  This just perpetuates the cycle of losing money so you've got no chance of getting out.

So, long and short, try to get out of the red ASAP.  But if you don't have any C checks coming due, you'll be alright for a little while.

[Misterfeep]

Thanks Sigma.  I do have a C check coming and I am sure it will drag me down.  I'll be smarter next time.  Still have a lot to learn but I found the forum section on advice for beginners and will spend time reading it.  I think the first advice in it was "patience".  I should have read that earlier.  I had a profitable route from the get go but added a second a/c on another route.  It is the second a/c that is going to drag me down.

[Misterfeep]

Still seems like there should be an interest charge though when I am running so far in the red.  Someone is carrying that debt for me (suppliers, etc.) and so I should be charged interest.

[Misterfeep]

Guess I should be more specific.  I make a profit some weeks.  But my money supply has been in the red for several game weeks.  That is what I think I should be charged interest on. 

[Misterfeep]

Yeah I think there is a flaw in the finance logic.  I am in Modern Times 1.  If I go to the View Airlines menu and sort on Value, Oriental Rose comes to the top.  They are operating with negative 1.4 billion in funds yet they carried 1.6 million passengers over the last month.  Either I am missing something or there is a significant flaw in the logic.  They shouldn't be in operation.

[Sigma]

Guess I should be more specific.  I make a profit some weeks.  But my money supply has been in the red for several game weeks.  That is what I think I should be charged interest on.  

If you were, it would show in the "Interest" line on your Income Sheet.  I can't say I've operated in the red long enough to notice it ever before.  It may or may not be there.  Regardless it's a fairly small thing and would really only serve to draw people already in the red, even deeper into the red even faster.  You usually aren't in the red in a sufficient dollar quantity to appreciably add up to much in terms of interest.

Yeah I think there is a flaw in the finance logic.  I am in Modern Times 1.  If I go to the View Airlines menu and sort on Value, Oriental Rose comes to the top.  They are operating with negative 1.4 billion in funds yet they carried 1.6 million passengers over the last month.  Either I am missing something or there is a significant flaw in the logic.  They shouldn't be in operation.

"Value" and "Funds" are two entirely different things.

You can have a very high negative value but have plenty of cash.   Loans count against your value.  If you borrow the money and sit on it, there's no net change to your value (liabilities go up equal to your cash increasing).  But if you've borrowed lots of money, then spent it on planes, that cash is now gone (and pending orders don't count as an asset).  So you've got a large liability in the loan, but the cash is now gone, so your value can go very deep in the red.  But you may have plenty of cash on hand and still be profitable.

[Misterfeep]

Sigma. Thanks for the clarification on value.  I will look at that more carefully.

I can say the system is not charging me interest while I have a negative cash balance even though it pays me interest when I have a positive cash balance.  I agree it is a minor issue but it seems like it would be an easy fix at some point.  As you said, it would speed the downward spiral for those in trouble.

And I should note that I did look at Oriental Rose and it was clearly in a rapid decline in terms of passenger loads.  So it is paying the price. 

Thanks again.  Great sim!

[Misterfeep]

Sorry one more comment.  The system did automatically do the C check even though I did not have the cash to pay for it.  I just went further in the red on my cash balance.  So I may survive!  But in terms of the C check it did not behave as you said it should.  I had read elsewhere that even when you don't have the funds to pay for a C check, if you leave it alone it will automatically do the check when it is due and simply push you further into the negative on cash.  That seems to be the case.

[Sigma]

It depends on how far in the red that you are.  A certain amount is acceptable because the game doesn't want you going bankrupt simply due to the timing of income and expenses during the week or even the month (i.e. most expenses occur on Wednesday, or the last week of the month might be poor due to all the B-checks being done, etc).  I've no idea what the threshold is, but at some point you stop getting money from the banks to cover ancillary expenses like that and the authorities catch you operating without proper maintenance and you get fined (you do pay the fine though).  When you see someone's pax numbers tank (and it happens very quickly) that's what you're seeing.